There is a vitally important national and state-level discussion taking place about how to address the government’s frighteningly large deficits while limiting disruptions for all Americans. But while federal and state actions affect us all, much of what concerns Americans most directly and personally happens closer to home and increasingly, this means in our cities. Budget cuts simply can’t derail efforts to make our cities smarter.

Today our nation’s cities are facing a “perfect storm.” For many cities, their populations are growing at the same time that their budgets are shrinking. Today, for the first time, more than 50% of the world’s population lives in cities. In the last decade large metropolitan areas in the U.S. grew by a combined 10% — nearly double the rate of the rest of the country. Our large metro areas now house two thirds of America’s total population. They have become the dominant forces in our economy and society.

Meanwhile, declines in revenue and escalating fixed costs for things like public employee pensions and health care are crippling our cities budgets. According to the National League of Cities, city financial officers have recently experienced the largest spending cuts and losses of revenue in a quarter century. Cities that have declined in population, such as Detroit or St. Louis, face tougher options as their revenues decrease even more rapidly.

Faced with this difficult situation, city leaders are mulling tough options and trying to pick among the lesser of multiple evils. Under the gun, many are proposing cuts that may produce short-term savings but could result in longer term costs. Two examples of penny-wise but pound-foolish decisions: A city might decide to reduce its number of public safety officers only to experience an increase in crime that drives away tax-paying businesses. It might increase school class sizes only to find that it might lower graduation rates and increase drop-out rates.

Cities can’t focus on such short-sighted solutions. They need systemic and longer term improvements. And that begins with examining their data and using it to take decisive action and reengineering how their governments are organized. For example, while school achievement data might be a good parameter for determining which schools and teachers are effective and which are not, a closer child-by-child examination — which is now possible using data analytics — can determine not only which students are doing well, but for those not doing well it can analyze the cause of the problem and suggest to the teacher a more effective solution. The result — increasing achievement and decreasing costly remediation.

In areas of the country most affected by snow, the use of weather prediction and analytics software can help determine in advance which storms are most likely to require more snow removal equipment and staff and help manage the resultant budgets accordingly. In public safety, better analysis of crime data can lead to better deployment of the public safety workforce, lowering crime and reducing cost. Smarter Cities are possible and better choices regarding budget cuts are possible, but only with better use of data.

It is estimated that there are now a billion transistors per human, each one costing one ten-millionth of a cent. As these sensors become embedded in everything from police records to parking meters, city leaders can analyze the resulting torrent of data, gain new insights, and perhaps find ways to make their cities work better and focus their budget cutting. Data analytics are no panacea, but they are the first step in unlocking alternatives to simply slashing city services and perhaps can lead to service improvements.

One example of how to use such an approach is the IBM Smarter Cities Challenge, a $50 million dollar grant program created by IBM that pairs the company’s top talent with city leaders in a unique effort to analyze a city’s data and systems and help them make more efficient and effective choices involving priority issues.

Over the next three years 100 competitively selected cities will receive IBM’s Smarter Cities Challenge grants. In Charlotte, a challenge grant developed a way to improve capital planning and yield lower interest rates and other cost savings. For instance, by connecting a school with a library or a health care facility with a social service provider, cities can save money and devote more to preserving vital services for citizens. In St. Louis, a challenge grant examined a more effective and efficient way to deploy public safety staff, and in Baltimore, a way to use data to better coordinate and enhance youth services.

Organizing our cities in inefficient and duplicative silos should become a thing of the past. Every department of government doesn’t need its own data center and every school district doesn’t need to order its own supplies or route its own buses. Consolidation across departments and across cities, counties and states can allow for significant efficiencies and economies with the savings used to reduce budgets or enhance services.

Another important step is to engage the public, and seek its support, by arming it with the data. Data analytics can give rise to fresh judgments about how once-controversial ideas such as the congestion traffic pricing plan proposed by Mayor Bloomberg in New York, might be approached anew, supported by clearer ways to measure and demonstrate their contribution to a city’s revenue and quality of life. Similar congestion pricing plans instituted in Stockholm and London have decreased traffic and increased revenue via public transit. Data and the software to analyze it can be used to win public support for such solutions, especially when juxtaposed against cuts in the social safety net. To make this task easier, IBM created City Forward, a free website that cities and their citizens can use to analyze data and make their cities more effective.

For the foreseeable future, cities may have to do more with less, but that need not make them less livable. Across the board budget cuts that produce short-term savings but have long-term consequences are not the answer. By starting with the data, which know no political party, and working collaboratively across the public, private and civic sector, city governments can take the first steps toward creating more livable cities and a brighter future for all citizens.

Stanley S. Litow is a vice president at IBM. Formerly, he worked for the mayor of the City of New York, served as deputy chancellor of schools for New York City, and founded Interface, a think tank that helped civic groups advise the New York City government during its last fiscal crisis.

Stanley S. Litow is a vice president at IBM. Formerly, he worked for the mayor of the City of New York, served as deputy chancellor of schools for New York City, and founded Interface, a think tank that helped civic groups advise the New York City government during its last fiscal crisis.

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